Alternative investment specialist Investcorp has agreed to acquire the debt management business of 3i (3iDM) from UK-based 3i Group for GBP222 million (approximately USD271 million).
The deal will see Investcorp’s assets under management (AUM) increase by USD12 billion to approximately USD23 billion.
Investcorp says the acquisition will add to the firm’s existing product offerings across private equity, real estate, and alternative investment solutions (formerly hedge funds).
The transaction is subject to various regulatory approvals and is expected to close in the first half of 2017.
3iDM is a global credit investment company managing funds which invest primarily in senior secured corporate debt issued by mid and large-cap corporates in Western Europe and the US. The business employs approximately 50 people in London, New York and Singapore. The existing management team of 3iDM will remain intact, with Jeremy Ghose continuing as CEO of the overall business and John Fraser continuing to oversee the US operations.
Mohammed Al Ardhi, executive chairman of Investcorp, says: "This is a milestone deal which will bring together two complementary businesses and broadens product diversity for existing clients of both Investcorp and 3iDM while deepening the geographical reach of the enlarged business. The combination brings with it some of the most talented credit investment professionals in the industry together with a large universe of private and institutional clients spanning Europe, Asia, the US and the Arabian Gulf. We're delighted to welcome the 3iDM team to Investcorp and look forward to growing the business further."
Rishi Kapoor, co-CEO of Investcorp, adds: "This is an exciting moment for us – we see this as a value-added transaction for all sides which will be accretive for Investcorp from day one. Under 3i's ownership, the 3iDM team has created a compelling alternative credit investment business which has seen assets under management more than double in the past five years. We see this business as one of the central pillars of Investcorp's product platform going forward and are absolutely committed to continuing to grow the business on multiple fronts including fundraising, product development and capital support."
Simon Borrows, chief executive of 3i, says: "The 3iDM business has had a strong run under 3i's umbrella and Investcorp is a great home for the business going forward given its strong reputation as a global diversified alternative investment manager with a deep and loyal investor franchise. The combination provides 3iDM with access to new and incremental sources of capital through Investcorp's client base in the Gulf and the US. The fit is excellent from a cultural, product and geographical perspective."
The transaction is the largest ever strategic acquisition made by Investcorp. It will be fully funded through the firm's existing balance sheet, and will not require any incremental debt financing or equity capital.
The firm will continue to maintain strong levels of liquidity and capital adequacy after the transaction, giving it flexibility to fund additional strategic acquisitions where appropriate.
